Japan is planning new rules for legalizing controversial cryptocurrency fundraising

Japan unveiled proposed guidelines for the legalization of a controversial means of raising money in the cryptocurrency space.

A government-backed research group has put forward rules that would see initial coin offerings (ICOs) given regulatory definition and approval. An ICO is a means of raising capital by issuing and selling new crypto tokens in exchange for cryptocurrencies like bitcoin and ethereum.

The proposals come as China and South Korea toughen up on cryptocurrencies with their own regulations to rein in speculation in the nascent market. Last year, both countries banned ICOs due to concerns of illegal activity and speculative investing in the space.

Japan was host to a cryptocurrency heist that saw more than $500 million worth of digital tokens stolen earlier this year. Coincheck, the virtual exchange hit by the cyberattack, said it would refund customers following the theft. It is thought to be the biggest theft of cryptocurrencies, surpassing the $400 million in bitcoin lost by cryptocurrency exchange Mt. Gox in 2014.

The collapse of Mt. Gox was seen as a test for bitcoin, which roared to a record high near $20,000 last year but has pulled back significantly since.

On Monday, the U.S. Securities and Exchange Commission (SEC) charged two founders of a cryptocurrency company that was endorsed by boxer Floyd Mayweather with carrying out a fraudulent ICO. The SEC has increased regulatory scrutiny of ICOs over concerns of fraudulent behavior associated with the practice.

Meanwhile, messaging service Telegram is holding what is thought to be the largest ever ICO. Telegram, which secures messages via end-to-end encryption, is itself used by many cryptocurrency investors as a means of communication. The firm is looking to raise $2 billion from the fund raise.